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Exam 15: Exempt Entities

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Question 31

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A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity.

A) True
B) False

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Question 32

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How can an exempt organization,otherwise classified as a private foundation,avoid private foundation status?

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An exempt organization that otherwise wo...

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Question 33

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What income and activities are not subject to the feeder organization rules?

Which of the following are organizations exempt under § 501(c) (3) ?

All exempt organizations which are subject to the unrelated business income tax must file Form 990-T (Exempt Organization Business Income Tax Return).

Federal agencies exempt from Federal income tax under § 501(c)(1)are not subject to the unrelated business income tax (UBIT).

Which of the following exempt organizations are required to file Form 990 (Return of Organization Exempt from Income Tax) ?

Assist,Inc. ,a § 501(c)(3)organization,receives the following sources of support during the tax year. Is Assist,Inc. ,classified as a private foundation?

A profit-related activity of an exempt organization avoids the unrelated business income tax if greater than 50% of the merchandise sold had been received as a contribution.

The income from a bingo game conducted by an exempt organization may be unrelated business income.

In calculating unrelated business taxable income,the exempt organization is permitted to deduct only the charitable contributions associated with the unrelated trade or business.

Identify the components of the tax model for unrelated business taxable income.

Teal,Inc. ,is a private foundation which failed to distribute an adequate amount of income for the exempt purpose of Teal.Which of the following statements is correct?

Spirit,Inc. ,a § 501(c)(3)organization,is classified as a private foundation.It has investment income of $80,000.Calculate Spirit's tax on its investment income.

Help,Inc. ,a tax-exempt organization,incurs lobbying expenses of $275,000 during the tax year.Help is eligible for and makes the § 501(h)lobbying expenditure election.During the year,Help spends $1,200,000 carrying out its exempt mission.

The excise tax imposed on a private foundation's investment income can be imposed both as an initial (first-level)tax and an additional (second-level)tax.

Links,Inc. ,an exempt organization whose mission is to aid marriages threatened by golf,contributes $100,000 to Couples,Inc. ,an exempt organization which provides counseling to dysfunctional marriages.Links,Inc. ,has net UBTI (excluding any modifications associated with charitable contributions)of $800,000.Assuming that the $100,000 contribution has been deducted in calculating net UBTI,determine the amount of any further adjustment in calculating UBTI.

Relevant factors in the unrelated business income tax (UBIT) rules for determining whether a trade or business is regularly carried on by an exempt organization do not include which of the following?

An exempt organization is located in the state of Nevada.Gambling in Nevada is legal.Therefore,bingo games are conducted by both taxable and tax-exempt organizations.If the net earnings from the bingo games are less than $25,000,the exempt organization is not subject to the unrelated business income tax (UBIT).

Orange,Inc. ,a private foundation,engages in a transaction with a disqualified person in the amount of $800,000.Calculate the tax on self-dealing.Assume that corrective action is taken so that the additional tax does not apply.